China’s foreign investment accelerates amidst US trade war

Shanghai Newspaper China's foreign investment accelerates amidst US trade tension

On Saturday, Trump claimed that “thousands” of companies were fleeing China because of US tariffs imposed by his administration over the last 13 months of the trade war.

Despite Trump’s claim, foreign investment in China increased in July absolutely contradicting claims from US President Donald Trump of an exit of investors.

According to the China’s Ministry of Commerce, In July, 4.1% increase in foreign direct investment (FDI) amounted to US$8.07 billion, relatively higher than the 3% rise registered in June on Tuesday.

Slightly picking up from an 8.5% rise in June, FDI increased to 54.82 billion yuan (US$7.8 billion) in July. According to the calculations based on figures from the commerce ministry, approximately 3,919 new foreign-invested enterprises were incorporated last month.

Trump was understood to be insisting that Beijing “badly” wanted a trade deal after the latest round of talks in Shanghai in July, which failed to yield any significant progress. After which came Trump’s threat to impose 10 per cent levies on US$300 billion of Chinese goods from September.

What has been a notable trend nowadays is that numerous international companies move part of their production lines to other countries to avoid tariffs and rising costs in China.

In the first seven months of the year, the aggregated FDI into China rose 7.3 per cent to 533.14 billion yuan.

However, the ministry did not disclose the growth rate of direct investment from the US, a figure that has been missing from the data for the last two months. The growth rate of investment from Hong Kong, which has been China’s largest source of foreign investment, was also not disclosed.

Investment from Germany and South Korea increased by 72.4% and 69.7% respectively between January and July.

Xin Guobin, vice-minister of Industry and Information Technology, insists that China’s economic growth, industrial upgrading, and employment are overall under control and that it is a normal recourse for enterprises to pursue regions with lower cost and that is in line with the objective laws of industrial development.